Post navigation

It’s not that easy to obtain a loan these days because of the stricter guidelines lenders use. So for those who want to buy a house, they may have to brace themselves for a slightly challenging experience because they may not find it easy to get a loan.

Today, not everyone will find it easy to buy their dream house. They will need to do a lot of preparation and make sure that they have a solid financial background so they can take out a mortgage without any problems. Lenders are less likely to help them if they can’t prove their financial stability.

This is totally understandable because lenders want to stay in business. As much as they want to help out every person who wants to obtain a loan, they can’t because they have to make sure that they only approve loan applications from people who are sure to repay the money. By being reckless and allowing unqualified people to borrow money, they put themselves at risk of losing a lot of money.

And with stricter borrowing guidelines, a lot of people would find it hard to enter the housing market. They will not be able to get hold of loans that they need to buy a house. Fortunately, there is a way for interested homebuyers to have a shot at homeownership. That is in the form of lenders mortgage insurance.

Also called private mortgage insurance or mortgage insurance, this removes the risk from loans. This will help lenders lend money to more people and not risk losing money even if the borrower defaults on the loan. By insuring the loan, lenders will not have to worry about borrowers’ potential inability to repay the loan. That should be good news for borrowers who can’t meet the tough requirements most lenders implement.

Even if you do not have enough cash for deposit or your credit score is not that favorable, you will still be able to borrow money by paying for insurance. This may be an additional expense but it will help you obtain a loan.

The question now is how much should you pay for the insurance? The amount is typically determined by the lenders and the mortgage insurer. It is their prerogative to charge a certain amount that you must pay. They will take a percentage of the amount of the loan and then deduct it from the money you’ll get. There are times, though, when lenders allow borrowers to divide the insurance payments and add them to the monthly repayments. For those who do not want to significantly reduce the initial amount they are going to get, this is good news.

You don’t know how much exactly you’re going to pay for insurance but you can have a good idea by using an LMI calculator. This online calculator is very helpful because it will help you get an estimate of the premium you need to pay. It is easy to find a calculator for LMI. All you need to do is go online. There are lots of companies that offer such calculators. They’re also very easy to use. You just need to fill out the boxes by putting certain information like the loan term, interest rate, LVR, etc. In just a few seconds, you will have a figure that you can work on.

Not having money in the bank can keep several people from attempting to apply for a loan because they know that their chances are slim. Lenders are not going to waste their time with them because they don’t meet one of the most important requirements for approving loan applications.

While it is true that you need to have some cash saved in the bank to qualify for a loan, it is still possible for you to borrow money by taking advantage of a no deposit home loan. You should be able to find lenders that are going to help you qualify for this.

What is this home loan? A no deposit loan will allow interested homeowners to borrow up to 100% of the property price. They do not have to pay deposit, which is typically 20% of the house price. With this, you do not have to spend a lot of time waiting until you have saved enough money in the bank. If you want to buy a house right now, you can do so with this type of loan.

There is just one downside, though. This kind of loan is not as common as it used to be because of the global housing crisis that affected a lot of countries several years ago, some lenders have become a little bit worried about letting people borrow money without any deposit. But that does not mean they are gone for good. You can still find lenders that are willing to work out something to help you out.

You have to know that this may not be as easy as you think because lenders need to make sure that you are not going to cost them money. You are considered a high-risk borrower, meaning you have a big chance of defaulting on the loan. And if you can’t prove to them that the loan is going to be repaid, they may not be able to do something to help you.

As scarce no deposit loans are, you will be able to find one especially with the help of a very good mortgage broker. One of the first things you need to do is look for a mortgage broker. A broker is an expert on this. He or she will help you arrange everything so you can take out a loan. More importantly, they know a lot of lenders. They will be able to lead you to the right door. So make sure that you have a broker first. This should make your life a lot easier.

If you want to borrow more than 80% of the property value and not have any money for deposit, you have to prove to lenders that they are free from risks. Having someone to guarantee your loan is a great solution. It could be anyone. Most people use their parents as guarantors. Parents are the perfect guarantors because lenders know that they will always be ready to help out their kids. But it does not mean other people, like relatives can act as guarantors.

This works by using their property as a security for the loan you are trying to obtain. This means the house needs to be paid for already. But in the case the parents are still repaying the loan, they can obtain a second mortgage.
When you have someone to guarantee your loan, lenders will be more lenient and waive the need to pay for deposit. They may even waive lenders mortgage insurance. That’s great because it would mean more savings for you.

So don’t worry if you do not have any cash in your savings account. You can still buy a house by taking out a no deposit home loan.